I am author of the book "Caring for Our Parents" and resident fellow at The Urban Institute, where I am affiliated with the Tax Policy Center and the Program on Retirement Policy. I also write a tax and budget policy blog, TaxVox, which you may read at Forbes.com or at http://taxvox.taxpolicycenter.org/ Before joining Urban, I was a senior correspondent in the Washington bureau of Business Week.

Wyden Bill Would Integrate Medicare Health Care, May Open the Door for Long-Term Care

A new Medicare payment model would encourage health systems to provide fully-integrated medical care for people with chronic disease, according new bipartisan legislation sponsored by senators Ron Wyden (D-OR) and Johnny Isakson (R-GA), and congressmen Erik Paulsen (R-MN) and Peter Welch (D-VT). The measure would allow, but not require, participating providers to offer long-term services and supports as well as medical treatment.

The bill is important because more than two-thirds of all Medicare recipients suffer from at least two chronic conditions. And they often struggle to organize their treatment among different specialists and primary care doctors under fee-for-service Medicare. Wyden, the bill’s main sponsor, is in line to become chairman of the powerful Senate Finance Committee which has jurisdiction over the Medicare program.

Under the measure, called the Better Care, Lower Cost Act of 2014, participating health systems or physician groups would be paid a fixed (or capitated) per enrollee rate. If they provide care for less than the monthly payment, they’d be allowed to keep the difference. If costs exceed the payment, providers would be at risk for any losses. Providers, called Better Care Plans (BCPs) would also have to meet quality standards.

BCPs would be required to provide all Medicare benefits, including physician visits, in-patient hospital care, diagnostic tests, post-acute care, hospice, and prescription drugs. They’d be required to perform a standardized health and functional assessment and create an individual care plan for each enrollee. Providers would be encouraged to operate in care teams.

To start, Medicare would approve about 250 BCPs—mostly in communities with high rates of chronic disease. The BCPs would look a little like the Accountable Care Organizations that were created by the 2010 Affordable Care Act but without certain enrollment limits, called attribution rules. Another existing model, Medicare Advantage Special Needs Plans, also attempts to provide integrated care for people with chronic conditions. Those plans, however, have been quite controversial.

The bill would be a major step towards immediately improving health care for Medicare beneficiaries with chronic conditions. It would also push medical schools to include chronic care, palliative care, and team-based care in their curricula—a very important long-run change in physician training.

Yet, while the bill would take major steps toward fully integrating medical care for Medicare beneficiaries with chronic conditions, it has a huge gap: It explicitly excludes long-term supports and services from the required package of care that Better Care Plans would offer.

According to a Wyden spokesman, the law would not prevent BCPs from providing supports and services. A BCP could, for example, pay for transportation to help a patient get to her doctor’s office, arrange for home health visits, or even install a grab-bar in her bathroom. “We want to provide flexibility,” says Wyden aide Ken Willis. But these services would not be required nor would they be included as part of the Medicare payment rate.

In effect, if a BCP could reduce costs and improve outcomes with these supports and services, nothing in the bill would prevent it. And the law’s flexibility might encourage some to do so. But they would not have to.

I understand where Wyden is coming from. This bill is a modest change to Medicare, not full-blown reform. And today Medicare does not pay for long-term care services. Adding such a benefit would be costly and extremely controversial, and Wyden didn’t want to go there—at least not in this bill.

Still, the measure has the potential to improve medical care for those with chronic conditions—and it may drive an important conversation about whether to eventually cross the red line and include supports and services as well.

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